Tuesday, January 01, 2013

Senate passes bad "fiscal cliff" deal. So is it time to give up on President Obama?

To begin, let me put it this way: There are good things and bad things about the fiscal cliff deal the Senate passed today, including:The good: Tax rates for the wealthy go back to Clinton-era levels; federal unemployment insurance is extended for another year; and certain tax breaks for low-income Americans are extended for five years. (And, as Krugman notes: "no giveaway on Social Security, Medicare, or Medicaid. Basically, no spending cuts at all." That's huge.)The bad: The threshold for the new/old tax rates is set at $450,000 for families and $400,000 for individuals, much higher than the $250,000 threshold Obama and the Democrats had initially sought; nothing is done about the debt ceiling, and so the Republicans can continue to use it to hold the political process and the economy hostage; the threshold for the 40 percent estate tax is set at the same level as that for income tax, which is very high, and it's also tied to inflation, which Republicans wanted, and sequestration is put off for just two months, meaning we'll be back in this whole fiscal mess sooner rather than later.It seems like a bad deal to me, one that requires Obama and the Democrats to give up way too much to the Republicans just to get something, anything done. And it seems like they're willing to give it up without much of a fight.Giving them the benefit of the doubt, I'll turn to Greg Sargent, who notes that the general sense that the president has the leverage to get a better deal done may be wrong:

Dems don't necessarily believe going over the cliff will give them all that much more leverage in the talks next year. It's been widely argued (by me and many others) that if we do go over the cliff, Dems can simply move to pass the Obama Tax Cuts For The Middle Class, forcing House Republicans to go along. But some Dems question whether House Republicans will feel the need to follow this script. Rather, the thinking goes, if Dems do that next year, the House GOP leadership can pass its own bill cutting taxes on all income up to, say, $500,000 or $600,000.

And, let's face it, all the fearmongering by Republicans, "centrist" fiscal scolds, and irresponsible media commentators and organizations (e.g., countdowns to the fiscal cliff, implying the going over it would be akin to hitting Y2K and the Mayan apocalypse at once) has taken its toll. Even if it's not the case -- that is, even if there's no such thing as the fiscal cliff (and there isn't) -- public and political perception tells a different story. Yes, polls suggest that the public blames the Republicans more than Obama and the Democrats for all of this, but it's a game of chicken. The White House may be thinking that, in the end, not getting a deal done would be worse than a bad deal simply because the blame would be spread around and Republicans would win simply because they tend not to blink, meaning that all the leverage in the world wouldn't get them to sign on to a deal, leaving the president in worse shape than he is now and forcing him to sign a worse deal down the road. Hence the urgency to get a deal done quickly, and hence Biden getting one done.There are also two things the White House may think it has in its favor: First, now that he's agreed to a deal to avert the whole fiscal cliff nonsense, Obama may be in a better position to force Republicans to make further concessions when negotiations resume. He got a few wins, he again showed he's willing to make the necessary compromises to get a bipartisan deal done, and he did what he had to do to get a deal done at a time when there was widepread clamoring for one. Maybe he can pull off more wins on the debt ceiling and spending in the next round. Second, there's no guarantee the House will agree to this deal, and if it doesn't, if enough Republicans rebel against their leadership, Obama will have additional leverage going forward simply because Republicans would have exposed their extremism. Consider Obama's aggressive comments at his press conference yesterday. Why else would be make them if he wasn't trying to back Republicans into a corner? It seems unlikely that the House will end up rejecting the deal, with a vote expected this week, but the point is that this story is far from over and there will be further opportunities for the president to make gains.But I'm really not willing to be this generous. Indeed, supporting Obama always seems to mean giving him the benefit of the doubt. And when you do that over and over again, you have to start wondering why you even bother. Sure, a lot of people gave up on him a long time ago -- over the drone war, over his extension of the Bush-Cheney national security state, etc. -- but coming out of his re-election win a lot of us remained hopeful that his second term would be more fruitful than his first.And the problem here isn't so much the policy of the fiscal cliff deal -- which, again, isn't great but also isn't terrible -- but the politics. Here's Paul Krugman:

[O]n the principle of the thing, you could say that Democrats held their ground on the essentials — no cuts in benefits — while Republicans have just voted for a tax increase for the first time in decades.So why the bad taste in progressives' mouths? It has less to do with where Obama ended up than with how he got there. He kept drawing lines in the sand, then erasing them and retreating to a new position. And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling.If Obama stands his ground in that confrontation, this deal won't look bad in retrospect. If he doesn't, yesterday will be seen as the day he began throwing away his presidency and the hopes of everyone who supported him.

[T]he emerging deal will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he's got all the leverage, when won't he cave? Never, the Republicans will assume. If Obama's too scared to stop bargaining and let the public decide who's right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans' mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won't negotiate over the limit. After this deal, why would any Republican ever believe this? I certainly don't, and I desperately want to.

Again, I do think I understand the politics of the current moment. The failure to get a deal done may have rebounded on Obama, and public opinion may have turned. And it's still possible that we'll get more of these deals -- this one and future ones -- than currently meets the eye.But I'm not terribly hopeful that things will change, that the president will be more than the conceder he has decided to be and that Democrats will stand firm against a reckless and dangerous opposition.Even if we decide not to give up on Obama, even if we still think there's opportunity for improvement, there's no way we should give him the benefit of anything. He has rewarded us with disappointment, and he deserves our doubt.